Citigroup Global Markets maintains 'sell' on Tata Steel

Tata Steel
CMP: Rs 171.65
Target price: Rs 125

Citigroup Global Markets has retained its ���sell��� rating on Tata Steel, citing an extended global slowdown, weaker steel prices in Europe and India, lower volumes and weaker margins.

���India���s steel demand growth which was in the range of 11-14% per year in the past three years has slowed. We take into account volume cuts announced by Corus, given the weakening demand in Europe and the UK. Sharp price cuts have an adverse impact on TSL���s consolidated EBITDA margins, which could fall from 14% in FY08 to 11% in FY10 and 10% in FY11,��� a Citi note to clients said.